Ninth Circuit Splits with Third and Fifth Circuits over CAFA's Single Happening Exception | Practical Law

Ninth Circuit Splits with Third and Fifth Circuits over CAFA's Single Happening Exception | Practical Law

In Allen v. The Boeing Co., the US Court of Appeals for the Ninth Circuit expressly split from the US Courts of Appeals for the Third and Fifth Circuits, holding that the Class Action Fairness Act of 2005's (CAFA's) single local event exception to federal jurisdiction applies only to a single event or happening rather than to a continuing set of circumstances or a continuous pattern culminating in a single injury-causing event.

Ninth Circuit Splits with Third and Fifth Circuits over CAFA's Single Happening Exception

by Practical Law Litigation
Published on 27 Apr 2015 • USA (National/Federal)
In Allen v. The Boeing Co., the US Court of Appeals for the Ninth Circuit expressly split from the US Courts of Appeals for the Third and Fifth Circuits, holding that the Class Action Fairness Act of 2005's (CAFA's) single local event exception to federal jurisdiction applies only to a single event or happening rather than to a continuing set of circumstances or a continuous pattern culminating in a single injury-causing event.
On April 27, 2015, in Allen v. The Boeing Co., the US Court of Appeals for the Ninth Circuit expressly split from the US Courts of Appeals for the Third and Fifth Circuits, holding that the Class Action Fairness Act of 2005's (CAFA) single local event exception to federal jurisdiction applies only to a single event or happening rather than to a continuing set of circumstances or a continuous pattern culminating in a single injury-causing event (No. 2:14-cv-00596 (9th Cir. Apr. 27, 2015)).
The plaintiffs sued The Boeing Company (Boeing) in Washington state court claiming that Boeing's use of hazardous solvents at a manufacturing plant for over 40 years contaminated the plaintiffs' groundwater and damaged their properties. The plaintiffs also sued Landau Associates (Landau), Boeing's environmental-remediation contractor, for negligence in inspecting and remediating the pollution.
Boeing removed the action to the US District Court for the Western District of Washington, asserting two different bases for federal jurisdiction: diversity jurisdiction and CAFA.
The district court remanded the case back to state court, holding, among other things, that the plaintiffs' action fell within the local single event exception to CAFA (28 U.S.C. § 1332(d)(11)(B)(ii)(I)). This exclusion eliminates federal jurisdiction over a civil action that would otherwise satisfy CAFA but in which all the claims arise from an event or occurrence in the state in which the action was filed, and that allegedly resulted in injuries in that state. Boeing obtained permission to appeal the remand order.
The Ninth Circuit vacated the district court's remand order. It rejected the district court's attempt to distinguish a prior Ninth Circuit ruling that the local single event exception is limited to a single event or happening, and does not apply to a continuing condition or ongoing pattern of conduct (Nevada v. Bank of America Corp., 672 F.3d 661 (9th Cir. 2012)).
In reaching its decision, the court observed:
  • The most common understanding of the terms "event or occurrence" is of a single happening.
  • A broad definition of these terms would be inconsistent with the overall structure of the statute, as it would blur the lines among the statute's various exceptions.
  • The legislative history, including the Senate Committee Report, reflects that Congress sought to limit the exclusion to cases that truly arose out of a local single event with no substantial interstate consequences.
  • The Senate Committee Report explicitly calls for courts to strictly interpret the CAFA exception, and the courts have endorsed this approach.
The Ninth Circuit went on to note that even if it interpreted "event or occurrence" as covering continuous or ongoing behavior resulting in a single injurious occurrence, the plaintiffs' allegations would still not meet the exception because they asserted claims against two distinct defendants, Boeing and Landau, for multiple separate actions.
The Ninth Circuit rejected Boeing's claim that the plaintiffs had fraudulently joined Landau. It held that joinder was proper because Boeing had not shown that there was no possibility that Washington law might impose liability on Landau.
The court declined to consider the parties' arguments about whether the complaint fell within the local controversy exception to CAFA because the district court had not addressed the issue. Instead, the Ninth Circuit remanded the action to the district court for consideration of this question.
With this decision, the Ninth Circuit explicitly upheld its previous interpretation of CAFA's local single event exception to federal jurisdiction, and declined to adopt competing interpretations from the Third and Fifth Circuits. The Third Circuit put forth the broadest definition, which includes a continuing set of circumstances that does not necessarily have a temporal limitation. The Fifth Circuit's definition was narrower than the Third Circuit's but arguably broader than the Ninth Circuit's holding. It includes a series of acts that occur over a period time but that result in a single happening that allegedly injures the plaintiffs.